JEDZ: Regional cooperation ‘open for business’

The city of Toledo had carried on like a “300-pound gorilla” up until the past 10 years.

At least, that’s Deputy Mayor Tom Crothers’ take on the city’s history of quietly buying up chunks of farmland in Monclova Township, taking care to purchase narrow strips of land to connect newly annexed property to the rest of the city. For example, Toledo owns two holes of Brandywine Golf Course for that reason.

Monclova Township wasn’t happy about it.

“Nobody liked it,” Crothers said. “Under the Bell administration we have a decidedly different approach, and that’s regional cooperation.”

Solid cooperation between the city and the township began in 2003, when Monclova Township voters approved the two entities partnering with Maumee to form a joint economic development zone (JEDZ). The area stretches along I-475 and extends to Strayer Road between Salisbury Road and the City of Maumee limit line.

A JEDZ is an agreement between municipalities and townships that allows townships to collect income tax on businesses and people working within its boundaries. Law does not permit townships to collect income taxes so they must rely on property taxes to bring in the bulk of their revenues. But when the housing market dives and the state government tightens its financial support for local governments, townships can easily run into trouble.

The entities involved in the JEDZ form a board and its members divide certain portions of the tax revenue that results. Then, some of the money is pooled and used to attract businesses to the area by, for example, offering tax rebates later.

This particular JEDZ splits the income tax revenue evenly between Maumee, Monclova and Toledo. Collections based on the 1.5 percent income tax totaled more than $778,500 in 2011.

The agreement benefits townships by filling budget holes caused by falling property tax revenue. It can benefit the cities involved by attracting more businesses and filling out the entire metropolitan region. And it can benefit a new or expanding business. After a business operates for a year, the board will select businesses located in the zone for tax rebates of up to $20,000 a year for up to 10 years. The formula is based on payroll and number of employees, said Chuck Hoecherl, Monclova Township trustee.

But, if you’re a business owner operating within the zone prior to the agreement and you don’t plan to hire more employees or expand, you’re out 1.5 percent of your earnings. If you’re an employee working and living in a township where you previously were not paying income tax, you’re out of luck, too.

That’s what happened to some employees at Jann’s Netcraft, a fishing supply company, when the JEDZ formed in 2004.

“The people who work here basically got a 1.5 percent reduction in their income,” said owner David Jankowski.

He and one of his employees, Robert Barnhart, took the JEDZ board to court through a series of filings that reached the Sixth District Court of Appeals. They tried to take the case to the Ohio Supreme Court when the lower court ruled the JEDZ lawful but the high court refused to hear the case.

Jankowski said he chose his location on Briarfield Road because it was close to I-475 and that the new income tax never threatened to run him out of business. However, his biggest objection to the JEDZ is that the area selected was already developed before the zone was declared.

In theory, JEDZ are helpful for economic development when they are designated in places that have little to no business or are in particularly depressed areas, said Jerry Miller, vice president of Miller Diversified Properties.

Say, for example, a company wants to build on a chunk of land but is discouraged from settling because there is no convenient water line. The JEDZ board, having raised money through the income tax deal, should be able to afford to construct a water line so the business could move in, he said.

Jankowski said he’s not seeing any benefits where his business sits.

“I am a small government kind of person,” he said. “I feel that you can drive economic development without government oversight. If there’s a market there, it’ll happen.”

Hoecherl said Monclova was able to afford new fire equipment that the township otherwise wouldn’t have been able to purchase. Collections also helped to keep the township serviced by sheriff’s deputies when the county could no longer afford to patrol the area without charge, Hoecherl said. Residents have since voted in favor of a levy that covers policing costs.

Maumee used the funds to complete intersection improvements on U.S. 23 and on Jerome and Monclova roads. Toledo has used its share for road and utility improvements.

But the ultimate goal is to pull new businesses in and develop the zone further.

Savage-McVicker Insurance and Service Spring Corp. are the first businesses the board has awarded with the tax rebate grant. They will feel the effects in 2013, Hoecherl said.

Construction on the stretch of U.S. 23 near the Salisbury Road exit has completed, the Jerome Road connector to Fallen Timbers is done and the area has a lot of shovel-ready, open land. Add in easy access to the turnpike, proximity to I-75 and U.S. 23 and the area is very marketable, Hoecherl said.

The Bell administration has been traveling across the world to attract business people to the region. The JEDZ is one tool that the city can use to help attract successful, foreign business. Also, the region is developing an EB-5 Visa Center, which invites foreign investors to commit $500,000 to a business endeavor here and create 10 jobs in exchange for a faster track to permanent residency, Crothers said.

“When we go overseas, they discover that [Toledo’s] right in the middle of everything,” he said. “You’ve got this great rail and oh, by the way, one-sixth of the world’s fresh water is right here. That’s the oil of the 21st century.”